ABFA challenges EPA’s RFS small refinery exemptions in court

On May 2, the Advanced Biofuel Association announced it has submitted a petition for review with the U.S. Court of Appeals for the D.C. Circuit to sue U.S. EPA Administrator Scott Pruitt, challenging EPA’s process for granting exemptions from compliance under the Renewable Fuel Standard to small refineries.

“We have seen reports that the number of small refinery exemptions recently granted for compliance years 2016 and 2017 have doubled compared to previous years,” said Michael McAdams, president of ABFA. “ABFA members are concerned that Administrator Pruitt is granting these exemptions in an arbitrary and capricious manner to undisclosed parties behind closed doors with no accountability for its decision-making process.”

“The news reports about these exemptions have had immediate and significant market impacts on the prices of renewable identification numbers (RINs) for the biomass-based diesel (D4) and overall renewable fuel (D6) pools,” McAdams continued. “Dropping RIN prices disincentivize blending, causing economic harm to ABFA’s members and posing a threat to the integrity of the RFS program at large.”

The petition, filed May 1, asks the court to review the U.S. EPA’s decision to modify criteria to lower the threshold by which the agency determines whether to grant small refineries an exemption for the RFS for reasons of disproportionate economic hardship.

According to the petition, this modified criteria or lowered threshold was applied to exempt an unknown, but reportedly historically high, number of refineries from their 2016 and 2017 RFS obligations.

The petition also notes that EPA has so far refused to provide basic information about the refineries that received the exemptions, or the agency’s rationale for granting individual exemptions due to alleged protections of confidential business information. The petition sites a request for this information submitted by members of Congress last month that has thus far been ignored.

“EPA’s change to the threshold for demonstrating ‘disproportionate economic hardship’ and the agency’s retroactive grant of a historically unparalleled number of exemptions has destabilized the national renewable fuels market, economically harmed ABFA’s members, and has undermined Congress’s goals for the RFS program,” the ABFA wrote in the petition. “A change of this magnitude in the number of exemptions granted is implausible and cannot be ascribed to year-to-year changes in the renewable fuels market, but can only be attributable to a decision by EPA to modify the criteria or lower the threshold by which it evaluates and grants exemptions in a manner that is arbitrary and capricious, an abuse of discretion, and otherwise not in accordance with the law.”